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Creating portfolio risk and return models [39]

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Bullet points include: May include ‘consensus’ views E.g. that there is a long-term equity risk premium This is still a view, as it might not prove true (or at least any particular quantification, e.g. 2% pa, might prove untrue, possibly too optimistic) May not be expressed as a return ‘view’ as such, if the consensus is overwhelming But just because a view is widely held doesn’t make it correct C.f. the view held by some before the credit crisis that a new paradigm had made credit markets intrinsically less risky

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